As anyone who has rented a rental car knows, figuring out who would be responsible for providing insurance coverage in the event of an accident can be very tricky. Most drivers will already be insured under their own private automobile insurance policies, but it can be unclear whether those policies extend to rental cars. Rental agencies often offer their own insurance, but often at a hefty price that can leave drivers uncertain whether the offer is genuine or merely a revenue-generating tactic. A recent case before the Tennessee Court of Appeals looks at liability and the payment of damages when accidents occur in rental cars.

In Martin v. Powers, et al., Mr. Powers was visiting a bar in Tennessee while driving a rental car. He became visibly intoxicated, and Mr. Martin, the bar owner, refused to serve him any further. He asked Mr. Powers to leave the bar and followed him out to the parking lot. When Mr. Powers got into his car, he turned it on and drove directly into Mr. Martin, causing an injury to his knee. At the time this all happened, Mr. Powers was driving a rental car owned by Enterprise. He also had private automobile insurance from Mountain Laurel Assurance Company. Mr. Martin had his own insurance, which covered expenses in cases of uninsured or underinsured motorists. Mr. Martin initially sued Mr. Powers, Mountain Laurel, and Enterprise, and he also let his own insurance, IDS, know that he was making a claim under his uninsured motorist coverage, just to be safe.

Mr. Power’s insurer, Mountain Laurel, immediately moved for a declaratory judgment, stating that it was not liable for damages resulting from the accident because Mr. Powers had intentionally driven into Mr. Martin, which was not covered under his policy. The court granted this declaratory judgment. Enterprise then also moved to dismiss under Tennessee statutes providing that it was not vicariously liable for injuries resulting from driver use of their rental cars. This was also granted. Finally, IDS moved for summary judgment, arguing that since Mr. Powers was driving a car owned by Enterprise, he was not an uninsured motorist under their coverage. Again, the court granted the motion, leaving Mr. Martin without recourse against anyone but Mr. Powers. Mr. Martin appealed.

IDS argued that Mr. Powers was not an “uninsured” driver because he was driving a car owned by Enterprise, which had declared itself as self-insured under Tennessee law. In response, Mr. Martin argued that this was not the intent of Tennessee’s self-insured provisions.

Under Tennessee law, individuals or entities may seek a certificate that they are self-insured rather than carry automobile insurance. In order to do so, they must show that they have sufficient assets to pay any judgment against them as a result of an accident. These individuals are not considered to be “uninsured” within the meaning of most uninsured motorist policies. Enterprise had just such a self-insurer certificate. However, Tennessee law also provides that rental companies are exempt from vicarious liability for any injuries or accidents involving drivers of their rental cars. Accordingly, the Tennessee Supreme Court determined that Enterprise is self-insured as to its own risks and liabilities as an owner, but not as to any vicarious liability for drivers, since it is protected from ever having such claims brought against it.

Accordingly, although Mr. Martin’s policy with IDS defined “uninsured motor vehicle” as “not mean[ing] a vehicle . . . owned or operated by a self-insurer,” the Tennessee Supreme Court determined that such language did not apply to Enterprise in this instance because Enterprise did not have to insure against risks or accidents caused by rental drivers. Accordingly, for the purposes of Mr. Powers’ accident, Enterprise was not insuring him, and he was a proper “uninsured motorist” for Mr. Martin’s insurance. The Supreme Court therefore reversed the grant of summary judgment and remanded the case for further proceedings.

If you have recently been injured in an automobile accident, one of the last things on your mind may be who will be held responsible for your medical expenses and recovery. Although it may not feel important at the time, identifying and understanding the various insurers at play can help you pinpoint the right defendants for your lawsuit. When rental cars and companies are at play, this may even mean that your own uninsured motorist policy will have to cover you. If you have recently been a victim of an accident involving a rental car, knowledgeable Tennessee car accident attorney Eric Beasley can help you identify insurance companies that may be important defendants in your claim. For more information or to discuss the circumstances of your case, contact the Law Office of Eric Beasley today at 615-859-2223.